Transfer of shares between two residents (of India) involves payment of consideration (buyer to the seller) and execution of share transfer deed. Share transfer deed to be duly stamped @ 0.25% of the consideration amount. When the transaction is between a resident and a non-resident, there are regulations concerning inward and outward remittance of funds, valuation of shares and submission of form FC-TRS on RBI FIRMS portal. The Reserve Bank of India (RBI) through Notification No. FEMA 20(R)/ 2017-RB dated November 07, 2017, made Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 to regulate investment in India by a Person Resident outside India.
Form FC-TRS is required to be filed for transfer of capital instruments (Equity Shares, Fully and Compulsory Convertible Securities) of an Indian Company in the following cases:
Transfer of capital instruments prescribed above shall be reported on receipt of every tranche of payment. One of the important dilemma between public at large is that who has to file this form with Authorised Dealer Bank?
The onus of reporting FC-TRS shall be on the resident transferor/ transferee or the person resident outside India holding capital instruments on a non-repatriable basis, as the case may be.
The form FCTRS shall be filed with the Authorised Dealer bank within sixty days of transfer of capital instruments or receipt/ remittance of funds whichever is earlier.
The following steps are included in filing of FC-TRS form:
Note: While executing the share transfer deed, stamp duty @ 0.25 % on the consideration amount is to be paid by purchasing the share transfer stamps, affixing those on the SH-4 and then crossing the same.
Additional Step may be required in delay submission of FC-TRS: In case the applicant fails to file FC-TRS within 60 days of transfer, then the AD Bank will forward the application to RBI for its approval.
There is no upfront (like MCA portal) statutory fees for filing FC-TRS on RBI FIRMS portal, but AD Bank may charge for processing FC-TRS. The processing fees may vary from Bank to Bank. The bank may ask for an authorisation from Applicant in order to deduct the bank charges from account.
Form FC-TRS is an online form that is to be filled and filed through RBI FIRMS portal along with the following important documents:
Price of share shall be decided on the basis of valuation of Shares as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a SEBI registered Merchant Banker or a practicing Cost Accountant.